RE A SOLICITOR

IN THE COURT OF APPEAL

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J U D G M E N T

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Barker, J.A. :

1. The Appellant, a Solicitor of the Supreme Court of Hong Kong, appeared before the Disciplinary Committee of the Law Society of Hong Kong, upon seven charges of professional misconduct.

2. The hearing before the Disciplinary Committee was in camera as was the hearing, in the Court of Appeal, in view of the provisions of section 13(4) of the Legal Practitioners Ordinance. The Appellant (hereinafter referred to as the Solicitor) was at all material times in the employ of a Hong Kong firm of solicitors (hereinafter referred to as the Firm) as a consultant. The charges arose in connection with the purchase of a flat in Kowloon by a husband and wife (hereinafter referred to as the Purchasers).  After a hearing at which, at his own election, the Solicitor appeared in person, the Displinary Committee found that all seven charges had been proved beyond reasonable doubt, that he was guilty of the misconduct alleged and ordered that the Solicitor be suspended from practice for a period of one year from the date of the order, but further ordered that their order should not come into effect until the determination of the appeal.

3. The seven charges, all of which were denied by the Solicitor, were as follows:

(a) The Solicitor failed to apply money received from a client or clients for the specific purpose for which it had been paid;

(b) The Solicitor failed to comply with Rule 3 of the Solicitors (General) Costs Rules and amendments thereto;

(c) The Solicitor was in breach of Rule 3 of the Solicitors Accounts Rules in not paying the monies from the client or clients into the Firm's account;

(d) The Solicitor concealed or failed to inform the Purchasers that the cash cheque drawn by the female Purchaser was not to be applied, and/or was not applied for the purpose for which it was intended, with a dishonest or improper motive;

(e) The Solicitor's actions were such that the Purchasers were exposed to the risk of litigation and further payment of fees in breach of his fiduciary duties to the Purchasers;

(f) The Solicitor committed a fraud on the Firm by not paying or causing the proceeds of the cash cheque of the Purchasers to be paid into the Firm's account;

and (g)The Solicitor's actions were such that they brought the Legal Profession into disrepute.

4. A number of witnesses gave evidence on behalf of the Law Society, of whom it is necessary only to mention three, namely the two Purchasers and a solicitor appointed by the Law Society to deal with all matters which were outstanding at the time when the Firm ceased to do business. I shall refer hereinafter to this solicitor as Mr. A.

5. The Female Purchaser gave evidence that she and her husband purchased the flat through an estate agent, and she signed the sale and purchase agreement therefor at the offices of the solicitors acting for the vendor (hereinafter referred to as Messrs. K). However, as she was worried by the fact that the payee of the two cheques which she had made out in respect of the deposit was apparently a different person from the Owner of the flat as registered in the Land Office, at the suggestion of her younger brother, she consulted the Firm.

6. Eventually she was out in touch with the Solicitor and in the presence of her husband she enquired of the Solicitor what his charges would be. There was some slight difference of recollection between the female and the male Purchaser as to the Solicitor's reply, but this reply was to the effect that the charge would be more or less the same as but not higher than the charges by Messrs. K, which had been $7,800.00.

7. Subsequent to this conversation, the Firm arranged a mortgage and the various necessary deeds were signed in the offices of the Firm on the 11th December 1985. The female Purchaser also brought with her a Banker's draft for $20,700.00 to complete the purchase, and was given a receipt therefor by one Lee, an employee of the Firm. Thereafter the Purchasers went to the office of the Solicitor.

8. The Solicitor then showed her a list of charges which, including disbursements, came to $8,050.00.   Both the Purchasers queried this, saying that the Solicitor had earlier told them he would charge less than Messrs. K. According to them, the Solicitor did not reply, but made some calculations on an adding machine and said that he would charge them $6,575.00. The Purchasers agreed to this and issued a cheque for that amount, made out to 'Cash' at the request of the Solicitor. The Solicitor refused to make out a receipt for the cheque, though requested by the Purchasers to do so. The cheque was postdated to the 13th December 1985, and was cashed on that day, but the Disciplinary Committee made no finding as to the identity of the person who did so.

9. On the 27th June 1986, Mr. A wrote to the Purchasers asking them to see him. Eventually, at or about the end of July 1996, they did meet Mr. A who informed them that, according to the Firm's file in relation to their purchase of the flat the Firm's costs and disbursements amounting to $8,050.00 were still outstanding. The Purchasers at once told Mr. A that they had personally handed a cash cheque for $6,575.00 to the Solicitor in payment of the Firm's costs and disbursements, whereupon Mr. A, arranged an appointment for the Purchasers to see the Solicitor. This appointment the solicitor did not keep, nor did he give to Mr. A his explanation of the matter, though requested so to do, twice in writing and twice on the telephone

10. On the 26th September 1986 the Solicitor wrote to Mr. A saying that it was virtually impossible to try to recall matters that happened a long time ago without the relevant file and added:-

"In so far as costs are concerned, if they were not paid, the only alternative is that they were waived."

11. The Solicitor was given on opportunity, which he took, of perusing the relevant file and on the 13th March 1987 he wrote to Mr. A as follows inter alia:-

"I waived the costs in respect of the assignment of the premises, which I was capable of so doing as consultant of the firm.

There is no receipt in the file relating to any costs received and that truly reflects the situation. ... Although the bill was prepared, costs were waived or the bill would have been delivered to the purchaser for payment and a receipt issued therefor."

12. Most though not quite all of the disbursements were in fact paid to Messrs. K towards the end of December 1985 and in January 1986. The Purchasers denied that they had paid any more to the Firm after handing over the 'Cash' cheque to the Solicitor. The Disciplinary Committee made no finding as to who had paid the disbursements.

13. The Purchasers were each cross-examined by the Solicitor who suggested to them that they had not handed a cash cheque to him, that he had waived all costs except the disbursements, that they had paid the disbursements, and that their evidence as to the handing over to him of the cheque was a deliberate fabrication on their part because of some bad relationship between the female Purchaser's brother and a third party. All the suggestions were denied by the Purchasers.

14. This then, so far as relevant, was the case for the Law Society.

15. The Solicitor gave evidence on his own behalf. He said that he saw the Purchasers in his office and there was a brief discussion as to costs. He thought they asked for a discount, whereupon he replied that a discount was simply not allowed because of the Law Society's Costs Rules and he told them that the only alternative would be to waive the costs of the matter which he did. As no bill of costs was delivered to the Purchasers, they paid no costs and no receipt was given.

16. As to his failure to keep his appointment with the Purchasers, he had suggested to Mr. A that he had explained to Mr. A that he had been suddenly called away for an I.C.A.C. case for a client, a suggestion which Mr. A denied. In his evidence in chief the Solicitor said that in fact he had an appointment with the Commercial Crimes Bureau and not the I.C.A.C. but that he had no intention of avoiding seeing the Purchases.

17. In chief, the Solicitor said that the arrangement he had with the Firm was that he would bring along his clients and files together with some members of his previous firm, and that his costs would go to himself, so that the Firm would not be out of pocket to employ him. The Solicitor had not mentioned this arrangement to Mr. A in any of his letters to or telephone conversations with Mr. A. The importance of what came in the course of argument on appeal to be called the 'alternative defence', is that it was and is the Solicitor's contention that, if which he denies, he did receive the 'Cash' cheque, because of the arrangement between him and the Firm there could not be a fraud because his client's costs should and would come to him.

18. The Disciplinary Committee's findings were as follows:

"After assessing the evidence of the witnesses, especially that of the Female Purchaser in comparison with that of the Solicitor, as well as the documentary evidence produced to the Committee, we accept the evidence of the Female Purchaser which is cogent and reliable and supported by the papers and documents produced ... We find that a cash cheque for $6,575.00 was handed to the Solicitor personally by the Female Purchaser on the 11th December 1985.

    We have been referred-to an authority relating to the standard of proof in this proceedings Bhandari v. Advocates Committee ((1956) 3 A.E.R.). We accept that the relevant standard of proof has been satisfied herein.

    No receipt was given in spite of, more than one request. Having perused the accounts and bank statements in the bundle of documents we are satisfied the Solicitor did not pay the monies received from the client into the Firm's account:

    We therefore come to the conclusion that all the allegations of the misconduct of the Solicitor as aforesaid have been proved beyond reasonable doubt and the Solicitor is found guilty of the misconduct as alleged."

19. It was argued that these findings do not comply with the requirements of section 12(1) of the Legal practitioners Ordinance Cap. 159 which reads:

"Every order made by a Disciplinary Committee shall be prefaced by a statement of its finding in relation to the facts of the case and shall be signed by the Chairman or by some other member authorised by the Disciplinary Committee in that behalf."

20. Suffice it to say that in my judgment these requirements were complied with.

21. Next it was argued that, as regards charges (a) to (d) inclusive, the Disciplinary Committee failed to comply with the rules of natural justice in that the charges were not sufficiently particularised so as to enable the Solicitor to know what the case against him was.

22. I would agree that the Law Society should as a rule give such particulars of the charges they bring, as they are able to do. But I cannot in the circumstances of this  case hold that the Solicitor was under any misapprehension as to the nature of the Law Society's case against him. He had been supplied well before the hearing with a copy of an affidavit by John Miller, the Secretary General of the Law Society of Hong Kong, which set out fully not only the charges proposed to be brought against him but also the Law Society's case in relation to those charges. Furthermore the case was fully opened by Counsel for the Law Society and no application was made for an adjournment. In my judgment the Solicitor was in no way prejudiced by any want of particularity in the charges.

23. The acceptance by the Disciplinary Committee of the evidence of the female Purchaser that she personally handed the cash cheque for $6,575.00 in my view must mean that the, Solicitor had been deliberately untruthful in his evidence on that issue. Furthermore I consider that it was implicit in the Disciplinary Committee's aforesaid finding that they rejected the Solicitor's "alternative defence".

24. I turn now to the charges themselves and shall deal with charges (a) and (d) together. There was evidence, which the Disciplinary Committee accepted, that the Solicitor failed to apply the $6,575.00 received by him from the Purchasers for the specific purpose for which it had been paid, namely in settlement of the Firm's costs and disbursements. Furthermore the Solicitor did not inform the Purchasers that the cash cheque was not applied, and was not to be applied, for the aforesaid purpose. In these circumstances the Disciplinary Committee were in my judgment fully entitled to find these two charges proved.

25. I next consider charge (b). Section 3(1) of the Solicitors (General) Costs Rules lays down the scales of costs which are to be charged in relation to non-contentious business. A solicitor is not permitted to give a discount. But this is precisely what the Solicitor did in this case, and did so knowing it was not allowed by the Law Society's Cost Rules. Counsel for the Solicitor argued that this' was a mere technical breach of the Rules. I do not accept this argument. The breach was a deliberate one committed knowing that it was such.

26. Charge (c). This relates to a failure to comply with Rule 3(1) which reads:

"Subject to the provisions of rule 9, a solicitor who holds or receives client's money shall without delay pay such money into a client account."

27. In this case the Solicitor did not may the client's money into the Firm's client account without delay or at, all But it was argued that he was under no obligation so to do by virtue of the provisions of Rule 9(2)(c) which provides:

"Notwithstanding the provisions of these rules, a solicitor shall not pay into a client account client's money held or received by him which -

(c) is paid to him expressly on account of costs incurred, in respect of which a bill of costs or other written intimation of the amount of the costs has been delivered, or as an agreed fee, or on account of an agreed fee, for business undertaken or to be undertaken."

28. In my Judgment rule 9(2)(c) is not relevant to this case because

(a) the money was not paid to the solicitor on account of costs incurred'- it was paid in full settlement of costs.

(b) no bill of costs or other written intimation of the amount of costs had been delivered; it had merely been shown to the Purchasers;

and (c) there was no agreed fee within the meaning of the rules. Even if there had been an agreed fee it was not in writing as required by section 56(3) of the Legal Practitioners ordinance.

29. The Disciplinary Committee were therefore fully entitled to find this charge proved.

30. Next I deal with charge (e). It is correct to submit on behalf of the Solicitor that by the time the hearing took place the Law Society was satisfied with the explanation which had been given to Mr. A by the Purchasers that they had paid the costs and that at that time there was no risk that they would be sued. But clearly they were exposed to the risk of litigation at the time when Mr. A was dealing with the Firm's affairs since a perusal of the Firm's relevant file caused him to think that the Firm's costs had not been paid, in which event the purchasers would be liable to pay them or, failing payment to be sued for them. Thus in my view the Disciplinary Committee were correct to find this charge proved.

31. Charge (f) was clearly the most serious charge, involving as it did, fraud. It was strenuously Argued by the Solicitor's Counsel hat in the absence of any evidence from someone in the Firm as to the terms of the Solicitor's employment with the Firm (and no such evidence was given) or of any investigation by the Law Society as to such terms it was not open to the Disciplinary Committee to find fraud proved against the Solicitor. This is a submission which I for my part cannot accept. In the first place, up to the time of the hearing there was no information before the Law Society which suggested that the terms of the Solicitor's employment with the Firm might be relevant to the charges laid against him. Secondly, once the Disciplinary Committee rejected, in my opinion they did implicitly by their findings, the "alternative defence" the terms of the employment of the Solicitor with the Firm were irrelevant in my judgment, on their findings, the Disciplinary Committee were bound to find charge (f) proved.

32. I turn finally to charge (g),namely that the Solicitor's actions were such that they brought the legal profession into disrepute.

33. Lord Upjohn said in McCoan v. General Medical Council⁽¹⁾:-

"The Medical Acts have always entrusted the supervision of the medical advisers' conduct to a committee of the profession, for they know and appreciate better than anyone else the standards which responsible medical opinion demands of its own profession."

34. This dictum was quoted with approval in Tarnesby v. The Disciplinary Committee of the General Medical Council⁽²⁾ where Lord Pearson said at page 3:-

"In a_. matter of this kind (sc. allegations of improper conduct) the decision of the Disciplinary Committee, composed of members of the same profession, must carry weight."

35. I respectfully adopt those dicta. It was for the Disciplinary Committee to decide, in the light of the evidence and of the charges which they found proved, whether the Solicitor's actions were such as to bring the legal profession into disrepute, judged by the standards which responsible legal opinion demands of its own profession. That decision will be interfered with by the Court of Appeal only if that Court is satisfied it was plainly wrong, In my opinion it was plainly right.

36. For the foregoing reasons in my judgment the appeal must be dismissed.

37. I feel it necessary to add two observations. First, before the appeal began there appeared, to be some confusion between the parties as to whose responsibility it was to lodge the documents relevant to the appeal, with the result that the Court was supplied with two copies of the transcript and of the bundle of exhibits, one from the Appellant and one from the Respondent.

38. Normally by Order 59(9)(1) of the Rules of the Supreme Court this duty is laid upon the appellant. However Order 59(1) provides:

"This Order applies, subject to the provisions of these rules with respect to particular appeals, to every appeal to the Court of Appeal not being an appeal for which other provision is made by these Rules

Generalia specialibus non derogant.

39. Appeals from the Disciplinary Committee of the Law Society of Hong Kong are specifically dealt with by Order 106 of the Rules of the Supreme Court and it is by this Order and this Order alone that the procedure relating to such appeals is governed.

Order 106(13) (1) provides:

"Within 7 days after being served with notice of the originating motion by which an appeal, is brought the (sc. Law) Society must lodge in the Registry 3 copies of each of the following documents -

(a) the order appealed against, prefaced by the statement of the disciplinary committee's findings required by section 12 of the (sc. Legal Practitioners) Ordinance,

(b) any document lodged by a party with the disciplinary committee which is relevant to a matter in issue on the appeal, and

(c) the transcript of the shorthand note, or, as the case may be, the note taken by the chairman of the disciplinary committee, of the evidence in the proceedings before the committee."

40. Secondly, I must deal with the standard of proof required of the Law Society in respect of charges laid by it before the Disciplinary Committee.

41. Counsel for the Law. Society is reported as saying at page 212 of the transcript:

"It's common ground that the prosecution (i.e. the Law Society) have to prove their case beyond reasonable doubt."

42. The Disciplinary Committee appeared to have acted on this concession because they held that the allegations of misconduct of the Solicitor had been proved beyond reasonable doubt.

43. This concession was in my opinion wrongly made. In Tarnesby's case (op cit) Lord Pearson said at page 6 of the judgment:

"As to the weight of the burden of proof, these are not criminal proceedings and the rules as to the burden of proof in criminal proceedings are not applicable. Nevertheless the weight of the burden depends on the gravity of the issues.  Hornal v. Neuberger Products Ltd. ((1957) 1 Q.B. 24 Blyth v. Blyth ((1966)A.C.643, 676-7). The issues in this case are grave issues."

44. In Bhandari v. Advocates Committee⁽³⁾ where the appellant had been found guilty of professional misconduct as an advocate. Lord Tucker said at p. 1452:

"With regard to the onus of proof the Court of Appeal said 'We agree that in every allegation of professional misconduct involving an element of deceit or moral turpitude a high standard of proof is called for, and we cannot envisage any body of professional men sitting in judgment on a colleague who would be content to condemn on a mere balance of probabilities.' This seems to their Lordships an adequate description of the duty of a tribunal such as the Advocates Committee."

45. This dictum in my judgment represents the Law of Hong Kong and should in future be followed.

Silke V.-P. :

46. I agree. The matter has been so fully covered by my Lord Barker J.A. that there is nothing which I can usefully add.

Sears, J.

47. I also agree.

(1) (1964) 1 W.L.R. 1107, 1112

(2) Privy Council Appeal No. 21 of 1969

(3) (1956) 1 W.L.R. 1442 J.C.